Citizens' Sav. Bank & Trust Co. v. White
| Decision Date | 11 March 1925 |
| Docket Number | 156. |
| Citation | 126 S.E. 745,189 N.C. 281 |
| Parties | CITIZENS' SAVINGS BANK & TRUST CO. v. WHITE ET AL. |
| Court | North Carolina Supreme Court |
Appeal from Superior Court, Craven County; Midyette, Judge.
Action by the Citizens' Savings Bank & Trust Company against E D. Skinner, James W. White, and others. Judgment for plaintiff, and the first-named defendant excepts and appeals. No error.
Indorsee of mortgaged note to whom mortgagee had not transferred mortgage held entitled to foreclosure where all interested parties were before court.
The plaintiffs alleged that on November, 29, 1918, the defendants James W. White and his wife executed to Sauls & Lamb their note in the sum of $850, due and payable one year after date with interest from date at 6 per cent., and secured the payment thereof by a mortgage on 10 acres of land; that the mortgage was duly recorded and the note indorsed to the plaintiff for value by Sauls & Lamb; and that thereafter White and his wife conveyed said land to the defendant Skinner.
White and his wife denied their alleged execution of the note and mortgage, and admitted their conveyance of the land to Skinner for $1,000. They alleged that Skinner paid the purchase price ($1,000) to Sauls & Lamb, who retained $795 the amount due them, and paid the remaining $205 to the defendant White. They denied that the plaintiff was the holder of the note in due course.
Sauls & Lamb admitted receiving $1,000 from Skinner, but alleged that it was to be applied in payment on the amount due them by White on an open account.
The jury's answer to each of the following issues was "Yes":
(1) Did the defendant J. W. White execute the note sued on in this action?
(2) Did the defendant Mary White execute the note sued on in this action?
(3) Did the defendant J. W. White execute and acknowledge the mortgage sued on in this action?
(4) Did the defendant Mary White execute and acknowledge the mortgage sued on in this action?
(5) Did the defendant R. W. Lamb tell E. D. Skinner at or before Skinner took a deed for it that there were no incumbrances on the land?
(6) Did E. D. Skinner pay R. W. Lamb $1,000 for J. W. White on the land?
(7) Did the plaintiff bank become the holder of the note before maturity and for value?
(8) Did the bank acquire said property without any notice of defect if there was one?
Thereupon the defendant Skinner tendered a judgment, awarding the plaintiff a recovery against all the defendants except himself of the amount due on the note, and adjudging that Lamb's representation to Skinner that there was no incumbrance on the land, and the acceptance by Sauls & Lamb of the purchase price, and their failure to convey to the plaintiff by registered conveyance the title held by them as mortgagees, worked an equitable estoppel upon them and the plaintiff, and adjudging further that the mortgage be canceled.
The court declined to sign this judgment, but entered judgment in behalf of the plaintiff for the face of the note and interest, and decreeing a foreclosure of the mortgage in default of payment. The defendant Skinner excepted and appealed.
R. A. Nunn, of New Bern, for appellant.
Moore & Dunn and Whitehurst & Barden, all of New Bern, for appellee.
In the note sued on--executed by James W. White and Mary E. White to Sauls & Lamb--there is the clause, "this note is secured by mortgage on real estate in Craven county." By proper indorsement of the payees the plaintiff became a holder of the note in due course; but, as the mortgage was not transferred or assigned, the legal title to the mortgaged property remained in the mortgagees. In these circumstances the plaintiff held the note without notice of any infirmity in it or any defect in the title of the payees, and in the absence of an agreement to the contrary the security followed the note. C. S. § 3033; Jones v. Ashford, 79 N.C. 173; Miller v. Hoyle, 41 N.C. 270. The mortgagees held the legal title in trust for the benefit of the plaintiff who, as holder of the note, was vested with an equity to have the land sold under the mortgage and the proceeds applied in payment of the debt. Hyman v. Devereux, 63 N.C. 624, 629; William v. Teachey, 85 N.C. 402; Kiff v. Weaver, 94 N.C. 274, 55 Am. Rep. 601; Jenkins v. Wilkinson, 113 N.C. 532, 18 S.E. 696; Baber v. Hanie, 163 N.C. 588, 80 S.E. 57, 12 A. L. R. 1518; Stevens v. Turlington, 186 N.C. 191, 119 S.E. 210, 32 A. L. R. 870.
It is immaterial that the plaintiff had no right to exercise the power of sale in the absence of a proper transfer of the mortgaged property by the mortgagees, because all interested parties were before the court when the decree of foreclosure was made. Weil v. Davis, 168 N.C. 298, 84 S.E. 395; Bank v. Sauls, 183 N.C. 165, 110 S.E. 865.
But the appellant contends that these principles are not applicable in the instant case, for the reason that, before making the purchase, he was assured by one of the mortgagees that there was no incumbrance upon the land, and that he paid the purchase price to the mortgagees at the request of the mortgagor, and accepted the deed upon this assurance. In support of this position he relies chiefly on Bank v. Sauls supra. There it appeared that the defendant J. L. Sauls had executed his promissory note for $6,000 to Sauls & Lamb and had secured its payment by a mortgage on land in Craven county, the mortgage having been duly registered; that the mortgagees had thereafter obtained a loan of $4,000 from the First...
To continue reading
Request your trial